Preforeclosures...School me

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Pre-foreclosure - The loan is in default and the seller is facing foreclusure. It seems like the bank pays the seller the value of the home minus the owner's equity in the home. So, from an investors perspective, if you find a property you are interested in that is in the preforeclosure state, is this the price you offer?

I guess, essentiall what I am after is, if you are able with a title search to determine the amount of equity that a seller has is apre-foreclosure property, how does that affect your offer? What are the pro's and con's of preforeclosure and foreclosure?

Thanks, and please humor my limited nderstanind of this process - I'm a tech guy:)